HONG KONG, CHINA / ACCESSWIRE / April 2, 2018 / Takung Art Co., Ltd. (NYSE American: TKAT), the operator of three online fine art and collectibles platforms, today reported that for the year ended December 31, 2017, the Company had a net loss of $1,061,575, or $0.10 per diluted share, on revenue of $12,922,388. This represents a decrease from the prior year in which the Company reported a net income of $6,370,694, or $0.56 per diluted share, on revenue of $19,143,429.
The Company's decrease in revenue was primarily due to a year-over-year decrease of $5,341,460 in listing fee revenue arising from the Company's authorized agent retraining program which reduced the number of artworks listed on the Company's trading platform. Takung's year-over-year revenue performance was also impacted by a drop in management fee revenue of $526,318, attributable to the Company's continued promotional activities in which it waived management fees for certain VIP traders during the period from September 1, 2016, to December 31, 2017. In addition, Takung had a decrease of $1,049,364 in annual authorized agent subscription revenue compared to 2016 (Nil in 2017). The Company discontinued the authorized agent subscription fee in 2017 in order to improve its ability to attract new high quality authorized agents.
Revenue in 2017 was boosted by a year-over-year increase of $696,432 in trading commission revenue, net of applicable rebates and discounts. This improvement was the result of an increase in the number of traders utilizing the platform and a 93% increase in trading volume compared to 2016.
Takung's bottom line was also impacted by a year-over-year increase of $4,811,532 in general and administrative expenses, which were driven by the previously announced $1.8 million write-off and the increase in salaries, office expenses, and travel expenses. These expenses were partially offset by a year-over-year reduction of $876,630 in selling expenses due to fewer promotion and advertising events.
"Despite 2017 being a difficult year for Takung, we nevertheless made significant progress in several areas," said Chief Executive Officer Di Xiao. "By year-end, we had expanded our trading base to 170,000 investors compared to just 80,000 a year earlier. We also improved our business in four important ways: first, we created an "A" tier top-performing portfolio designation to help new and retail traders easily identify existing high quality portfolios; second, we reduced the number of lower-quality portfolios; third, we improved the quality of newly listed portfolios by retraining our authorized agents; and fourth, we strengthened our criteria for authorized agents."
"In addition," continued Mr. Xiao, "we introduced two new asset classes, Collectibles and Sports Memorabilia, both of which have received an enthusiastic response from traders and are expected to contribute significant monthly revenue in 2018. In fact, our initial Sports Memorabilia portfolios have already driven strong year-over-year growth in both listing fee revenue and trading commission revenue in January and February of 2018."
"Our strong start to 2018 is supported by a strong balance sheet of cash and cash equivalents at approximately $11.9 million as of December 31, 2017. We expect this cash balance to be more than sufficient to support our 2018 operations and initiatives, which will include the listing of an important work by a western artist and the U.S. launch of our ecommerce platform, Takung Online," concluded Mr. Xiao.
For additional information on Takung's 2017 performance, please see the Company's 10-K filing at www.sec.gov. About Takung Art Co., Ltd.
Takung Art Co., Ltd. enables China's growing middle class to invest in fine art and collectibles through three proprietary online platforms: Takung Unit, which facilitates trading and shared ownership of Asian and international fine art; Unit+, which facilitates trading and shared ownership of Asian and international collectibles; and Takung Online, an e-commerce platform enabling artists to promote and sell entire pieces of artwork directly to buyers. Takung is headquartered in Hong Kong and operates primarily in Hong Kong through its direct wholly-owned subsidiary Hong Kong Takung Art Company Limited and its two wholly-owned subsidiaries in Shanghai and Tianjin that facilitate service and support to its PRC-based traders on the Company's platform. For more information, please visit the Company's website: http://ir.takungart.com/. The Company routinely posts important information on its website.
Forward-Looking Statements
This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions which reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and are subject to change at any time. We operate in a very competitive and rapidly changing environment where new risks may emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
Contacts:
Takung Art Co., Ltd. Mr. Leslie Chow Phone: +852 31580977 Email: irmail@takungae.com
TAKUNG ART CO., LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars except Number of Shares)
December 31,
December 31,
2017
2016
ASSETS
Current assets
Cash and cash equivalents
$
11,866,965
$
13,395,337
Restricted cash
25,273,617
21,743,360
Account receivables, net
2,291,698
3,058,568
Prepayment and other current assets
2,300,207
968,446
Loan receivables
7,834,115
6,374,046
Total current assets
49,566,602
45,539,757
Non-current assets
Property and equipment, net
2,191,321
2,065,182
Intangible assets
22,334
20,546
Deferred tax assets, net
291,430
181,154
Other non-current assets
757,235
428,764
Total non-current assets
3,262,320
2,695,646
Total assets
$
52,828,922
$
48,235,403
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities
Accrued expenses and other payables
$
1,461,858
$
608,883
Customer deposits
25,273,617
21,743,360
Advance from customers
170,078
360,248
Short-term borrowings from third parties
7,208,761
6,308,513
Amount due to related party
483,822
1,031,805
Tax payables
312,575
549,897
Total current liabilities
34,910,711
30,602,706
Total liabilities
34,910,711
30,602,706
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,188,882 shares issued and outstanding as of December 31, 2017; 11,169,276 shares issued and outstanding as of December 31, 2016)
11,189
11,169
Additional paid-in capital
6,116,216
5,532,426
Retained earnings
12,111,096
13,172,671
Accumulated other comprehensive loss
(320,290)
(1,083,569)
Total stockholders' equity
17,918,211
17,632,697
Total liabilities and stockholders' equity
$
52,828,922
$
48,235,403
TAKUNG ART CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Stated in U.S. Dollars except Number of Shares)
For the Year
Ended December 31,
For the Year
Ended December 31,
2017
2016
Revenue
Listing fee
$
5,572,840
$
10,914,300
Commission
6,112,868
5,416,436
Authorized agent subscription revenue
-
1,049,364
Management fee
1,235,659
1,761,977
Annual fee
1,021
1,352
Total revenue
12,922,388
19,143,429
Cost of revenue
(1,247,286)
(1,129,031)
Gross profit
11,675,102
18,014,398
Operating expenses
General and administrative expenses
(12,111,075)
(7,299,543)
Selling expenses
(1,395,709)
(2,272,339)
Total operating expenses
(13,506,784)
(9,571,882)
(Loss) income from operations
(1,831,682)
8,442,516
Other income and expenses:
Other income
576,965
416,353
Loan interest expense
(600,819)
(202,376)
Exchange gain (loss)
1,136,817
(516,350)
Total other income (loss)
1,112,963
(302,373)
(Loss) income before income tax expense
(718,719)
8,140,143
Provision for income taxes
(342,856)
(1,769,449)
Net (loss) income
(1,061,575)
6,370,694
Foreign currency translation adjustment
763,279
(1,082,151)
Comprehensive (loss) income
$
(298,296)
$
5,288,543
Earnings per common share – basic
$
(0.10)
$
0.60
Earnings per common share – diluted
$
(0.10)
$
0.56
Weighted average number of common shares outstanding –basic
11,077,845
10,641,180
Weighted average number of common shares outstanding –diluted
11,077,845
11,309,190
TAKUNG ART CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Stated in U.S. Dollars)
For the Year
For the Year
Ended December 31,
Ended December 31,
2017
2016
Cash flows from operating activities:
Net (loss) income
$
(1,061,575
)
$
6,370,694
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
742,272
523,698
Interest expense
283,636
-
Bad debt expense
2,076,159
-
Changes in exchange rate
(1,105,458
)
508,606
Stock-based compensation
751,157
812,759
Deferred tax liabilities
(23,668
)
17,581
Deferred tax assets
(86,608
)
(243,772
)
Changes in operating assets and liabilities:
Account receivables
(1,309,289
)
(2,874,031
)
Amount due to related party
(622,392
)
-
Prepayment and other current assets
(2,056,243
)
528,653
Other non-current assets
(328,471
)
(307,383
)
Restricted cash
(3,530,257
)
(5,548,071
)
Due to director
-
502
Customer deposits
3,530,257
5,548,071
Tax payables
(237,322
)
(1,014,473
)
Advance from customer
(190,170
)
360,248
Accrued expenses and other payables
852,975
(58,739
)
Net cash (used in) provided by operating activities
(2,314,997
)
4,624,343
Cash flows from investing activities:
Purchase of property and equipment
(814,455
)
(1,412,302
)
Purchase of available-for-sale investments
(76,810,709
)
(8,929,857
)
Maturity and redemption of available-for-sale investments
76,810,709
8,929,857
Purchase of held-to-maturity investments
-
(14,402,996
)
Repayment of loans by third parties
3,795,028
-
Maturity and redemption of held-to-maturity investments
-
14,402,996
Loans to third parties
(4,553,532
)
(6,374,046
)
Net cash used in investing activities
(1,572,959
)
(7,786,348
)
Cash flows from financing activities:
Proceeds from short-term borrowings
1,000,000
6,308,513
Proceeds from related party loans
-
1,031,805
Net cash provided by financing activities
1,000,000
7,340,318
Effect of exchange rate change on cash and cash equivalents
1,359,584
(1,552,432
)
Net (decrease) increase in cash and cash equivalents
